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After going steady for the last two years, Dubai’s office leasing market sure looks to have kicked up a gear or two. And that too almost effortlessly.
The brand new One JLT within DMCC free zone had it easy picking up a roster of blue-chip tenants; the Dubai Design District is well on its way as the address to be for those in high couture and creatives; and the many high-rises at DIFC are at peak occupancies with hardly any room to spare.
Clearly, there is a very different fundamental driving Dubai commercial space as compared with what has been happening on residential space.
‘New stock recently delivered within buildings such as Index Tower and Burj Daman are providing much needed relief to the DIFC which is almost at full capacity itself,’ says the latest Dubai office market update issued by Knight Frank. ‘One of the most anticipated announcements within DIFC continues to draw market interest, where a joint venture between ICD and Brookfield is planning to deliver a 50-storey office tower that will sit behind Currency House and the Ritz Carlton with direct physical access into the free zone itself.’
Indeed, Emirates REIT early this week announced two further leasings — taking up 36,000 square feet — at the upscale 80-storey Index Tower, Both leases are for five years apiece. With the latest signings, ‘total occupancy of Emirates REIT’s portfolio (rises) to 76 per cent, well above Dubai’s average commercial occupancy rate. Further releases of fitted-out office floors at the Index Tower are expected by the end of October,’ the company said in a statement.
‘Signs towards the latter end of Q3 suggest that occupier demand for the remainder of the year will remain strong,’ the Knight Frank report adds. ‘With tenant’s end-of-year decision-making window now noticeably shorter, this has provided added stimulus and urgency to businesses who now need to move quickly to secure premises for occupation by Q1 next year.
‘Occupier activity continues to be seen in the shape of expansions, new start-ups, consolidations and renewals which has further reduced vacancy levels, especially within prime office developments where the supply of available space remains low.’
There is still plenty in the supply pipeline. Master-developers are again getting into the swing of launching premium standalone office projects.
‘The new office development at the Trade Centre, expected to be delivered in Q4 this year, will add some much needed grade A supply to the market,’ Knight Frank adds. Recent announcements have clarified that the development will now also be suitable for free zone based business as well as those with a DED (Department of Economic Development) trade licence.’
“The office leasing market has been active, particularly demand for small offices,” said Robin Teh, Country Manager at Chestertons Mena. “Office space near transit areas — Vision Tower in Business Bay and Almas tower in JLT — have seen high demand.
“There is slight correction in prime areas such as DIFC. However, secondary areas such as Al Barsha and Silicon Oasis continue to see good demand.’
JLL in its Dubai Q3 update released on Tuesday, finds that within the city’s commercial space, ‘tenants are migrating between free zones because of the lack of quality elsewhere. The limited available supply in Tecom for example has prompted tenants to take up space in JLT. This trend is likely to continue as demand for quality office space continues to grow. ’
Source: Manoj Nair, Associate Editor, gulfnews.com